THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN ANCHOR: Thanks very much, Lou. And it's happening now, Iran showing off missiles, which could shield its nuclear program and target ships at sea and its supreme leader warning of an all out answer to any American attack. Is it saber rattling or something even more ominous? A furious battle on the floor of the U.S. House of Representatives, as Republican rivals step up their efforts to ground the thing called Air Pelosi, but is the speaker's efforts to arrange an Air Force jet starting to take off?

And she was a fixture in the tabloids, a billionaire's widow and one-time "Playboy" playmate. Now an unexpected and mysterious death for Anna Nicole Smith.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Iran opened today with fire, with missiles and menacing words. The missiles which can strike targets far out at sea and guard the skies at home are a veiled warning to the United States not to attack Iran's nuclear sites. The words from Iran's top ayatollah may be a direct threat to Americans also around the world.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, a tense standoff between the U.S. and Iran, neither are backing down, instead, turning up the heat.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): No retreat. No surrender.

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

VERJEE: A warning to the U.S. from Iran's supreme leader, if attacked, Iran will strike back at American interests worldwide. Iran's state television quoted Ayatollah Khamenei as saying we believe no one would make such an unwise and wrong move to attack Iran that would endanger their country and interests.

Iran's controversial nuclear program, as well as accusations it's fueling violence in Iraq have made the country enemy number one.

CONDOLEEZZA RICE, SECRETARY OF STATE: What we are doing is we're responding to a number of Iranian policies, both in Iraq and around the world that are actually quite dangerous for our national security.

VERJEE: The U.S. insists if favors diplomacy and has no intention of going to war with Iran. But the Democratic chairman of the Senate Foreign Relations Committee echoed what's making many in Iran nervous.

SEN. JOSEPH BIDEN (D-DE), FOREIGN RELATIONS COMMITTEE: The rhetoric coming from the administration about Iran is starting to sound a little like a run-up that we heard to the Iraq war in the fall of 2002.

VERJEE: And that's pushing Iran to flex its military muscle more, by test firing a new Russian missile near the Persian Gulf Wednesday. A top commander threatens the missile can sink all kinds of big warships, a not so subtle warning to several U.S. warships in the Gulf. The U.S. says it's not worried.

Still, the pressure on the Islamic regime intensifies. Beyond U.N. sanctions over Iran's nuclear program, the U.S. is pushing international companies and banks to stop doing business in Iran. And is detaining Iranians in Iraq suspected of making trouble.

(END VIDEOTAPE)

VERJEE: It's important to note that what the ayatollah said today is not rare. He said that before. War games in Iran also happen often as well, but experts say, Wolf, it's the timing that's significant and it's the response to increased U.S. pressure -- Wolf.

BLITZER: All right, Zain. Thanks. Iran says it has also tested a new air defense missile, which could guard its nuclear sites against any possible strike. This is the Russian-made TOR-M1. It's a mobile highly sophisticated weapon, containing up to eight missiles on a launched vehicle. Watch this.

It can track multiple targets at a distance of up to 15 miles. It can fire at two targets simultaneously and destroy them at altitudes up to 20,000 feet. The TOR-M1 is said to be effective against combat jets and against cruise missiles.

These new missiles, by the way, come from Russia, which confirmed their delivery just last month. Russia had said it would supply 29 of the missile systems to Iran for a cost of some $700 million. The United States strongly protested the deal, though to no avail.

Is America headed for a showdown with Iran and its new weapons? Even though the United States is keeping two, two aircraft carriers in the region in the Persian Gulf, there was a very telling admission today from the new Defense Secretary Robert Gates.

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: We have no intention of attacking Iran. The president said that. The secretary of state said it. I've said it before. Obviously when it comes to things like these tests, we watch them closely. And other than that, I think it's just another day in the Persian Gulf.

(END VIDEO CLIP)

BLITZER: The Bush administration said today the U.S. has made clear in its dealing with Iran's nuclear programs through diplomacy.

In Iraq, meanwhile, civilians were slaughtered today at a mosque and a market. Dozens were killed in the two bombings. Dozens more died at the hands of gunmen. And the U.S. military says 13 insurgents were killed in a coalition air strike targeting foreign fighters.

Allied forces also struck back in the heart of Baghdad where authorities now say a stunning raid nabbed a senior Iraqi government official accused of close ties to a radical militia. Joining us now from Baghdad, our correspondent Michael Ware.

Michael, there's obviously evidence that various Iraqi ministries, the police force, the army have been infiltrated and now this arrest of this deputy health minister. How big of a deal is this?

MICHAEL WARE, CNN CORRESPONDENT: This is a significant move, Wolf. I mean it's long been known by the U.S. military and the intelligence agencies that members of the government, senior members of these ministries, people in cabinet, have been involved in a whole range of nefarious activities from corruption to death squads.

Well, in terms of the politics here on the ground, this has been a daring maneuver. Iraqi Special Forces which, by and large, effectively answer only to the American military, storming to the Ministry of Health and take a deputy minister and drag him away. This caused an enormous flap in parliament. And this is a direct challenge to the political might of rebel anti-American cleric Muqtada al-Sadr. This is a big deal, Wolf.

BLITZER: Because supposedly this deputy helped ministers align with this anti-American radical Shiite cleric and his Mehdi Army. So what can Muqtada al-Sadr do about this?

WARE: Well, not a great deal. I mean this is one of his politicians. This man is from essentially his political party. But there's not a lot that they will do immediately. I mean they're not going to take to the streets. There's not going to be armed confrontations.

These guys are far too savvy to gamble that much so openly on just one individual. We're seeing a series of arrests of some of the key Mehdi Army people, both the military and political figures. This is just another one that really suddenly try and put the squeeze on Muqtada.

And note, Wolf, that the U.S. military is by and large doing this on its own. It's driving this, I think, because it's not getting the help it needs from the Iraqi government. Remember, the prime minister is in power because of Muqtada and his Mehdi Army.

BLITZER: Well, if you look down the road the next few weeks, months, who is going to win this battle? It's effectively, as you've painted, a battle between Muqtada al-Sadr and his Shiite army on the one hand and the U.S. on the other.

WARE: Well, at this stage you'd have to say that you know all the odds are in Muqtada's favor. I mean possession is nine-tenths of the law. I mean he's the one who holds the momentum on the streets. It's his large block within parliament that was kingmaker that put Maliki into power, the Iraqi prime minister.

They still hold much sway. Sadr City, the true stronghold here in the capital of the Mehdi Army militia, home to almost half of the city's population of more than five million has yet to be really confronted by the U.S. military. The military says we can access all parts of the city.

Yes, they can storm in and storm out, guns blazing. But the U.S. military cannot stay in Sadr City. So right now, Muqtada and his factions definitely have the upper hand.

BLITZER: Michael Ware, our reporter in Baghdad. Michael thanks.

WARE: Thank you, Wolf.

BLITZER: Let's check in with Jack Cafferty in New York. Blunt assessment, blunt assessment from Michael Ware, as usual, Jack. The Muqtada al-Sadr forces have the upper hand over the United States in Iraq right now.

JACK CAFFERTY, CNN ANCHOR: And I think have had for a while. You know, this surge idea, there are a lot of smart minds that don't give this thing much of a chance of working. And I think Michael Ware is even suggesting that he has doubts as well.

Homeland Security Secretary Michael Chertoff made his first appearance today before the Democratic-control House Appropriations Subcommittee. The chairman of that subcommittee, David Price of North Carolina, says throwing more money at homeland security's problems won't fix them. And he called the department's budget request inadequate.

Price listed some of the department's problems, including demoralized employees and spending money without results, lots and lots of money. And Price, along with the top Republican on the subcommittee agreed that they had issues with homeland security's new budget request.

Chertoff defended that request. It's only about one percent more than last year's budget. And he said it was sound, simple, and ample, his words. The fact of the matter is they go through tens of billions of dollars a year at Homeland Security with precious little to show for it.

The country's borders remain unprotected. The ports are unprotected. The department is still suffering a huge, huge public relations black eye and deservedly so for its abject failure during Hurricane Katrina. And who can forget the early advice to us Americans to wrap up our homes with duct tape and plastic sheeting?

There is a silver lining, though. They have gotten very, very good at one thing, that's taking nail clippers away from old ladies at airports. Here's the question. How would you fix the Department of Homeland Security? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile.

Coming up also, is Iran arming and training insurgents in Iraq? I'll ask the spokesman for the multi national forces in Iraq. My interview with U.S. Army Major General William Caldwell in Baghdad, that's coming up.

Also, a CNN exclusive -- our Jeff Koinange travels into a remote part of Africa to find hostages with guns to their heads and he winds up coming face-to-face with some very mysterious men wearing ski masks. We're going to bring you new details of this frightening encounter. You're going to want to see this.

Plus, we'll have more on the sudden death of Anna Nicole Smith.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Two of the most high-profile men in Washington taking center stage today in the trial of Lewis "Scooter" Libby. Sources telling us there's growing debate among defense lawyers about having the Vice President Dick Cheney take the stand. And today, the prosecution star witness grilled in cross-examination. That would be NBC News' Tim Russert.

Let's go to CNN's Brian Todd. He's outside the courthouse here in Washington with more on this dramatic day -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Indeed, Wolf, today eyes on two of the toughest political fighters in Washington. One of them, Vice President Dick Cheney may not appear as a witness in this case as was originally planned. The other one -- a well known TV figure...

(AUDIO GAP)

(BEGIN VIDEOTAPE) TODD (voice-over): The tables turn on one of the toughest interviewers in the news business. NBC's Tim Russert appears nervous on the stand as Lewis "Scooter" Libby's lead attorney points out Russert's perceived inconsistencies, asking why Russert willingly talked to an FBI agent about his key conversation with Libby, then tried to avoid testifying about that conversation to a grand jury because he believed it was confidential.

Russert says his contact with the agent and his testimony were separate and distinct. Russert stiffens when the defense points he and his colleagues at NBC couldn't get their stories straight about who among them knew administration critic Joe Wilson's wife worked at the CIA and when they knew it.

JEFFREY JACOBOVITZ, TRIAL ATTORNEY: He has to punch holes in the credibility of witnesses, government witnesses' testimony. With Russert, they tried to show that in fact his memory was faulty on occasion. There were various instances where he didn't remember things.

TODD: The dispute between Russert and Libby is at the heart of this case, Libby claiming he found out about Wilson's wife from Russert, the newsman saying that never happened. With Russert grilled like this, what happens if Libby or Vice President Dick Cheney take the stand?

A source with knowledge of the case tells CNN Libby's defense team is debating whether to have him or his former boss testify. The defense concerned, the source says, about either of them getting picked apart on cross-examination by prosecutor Patrick Fitzgerald. A former special prosecutor says a key part of Libby's defense may crumble if Cheney testifies.

SCOTT FREDERICKSEN, FORMER SPECIAL PROSECUTOR: It plays against the defense of, gee, I think I made a mistake, I forgot. I didn't understand. When in fact the vice president himself will be the source of testimony talking about just how focused they were.

(END VIDEOTAPE)

TODD: We asked a spokeswoman for Libby's defense team if there is any internal debate over Libby or Cheney taking the stand. She would not comment. Right now, the vice president is listed as a probable, possible witness -- Wolf.

BLITZER: All right. Brian thanks. We'll watch it together with you.

Meanwhile, the Libby trial is giving all of us a rare glimpse of the inner workings of the Bush White House and some of it is very revealing.

Our senior national correspondent John Roberts has that part of the story -- John.

JOHN ROBERTS, CNN SR. NAT'L CORRESPONDENT: Wolf, it's a fact of life, every day the White House tries to win the news cycle. What's unusual about this case is the lengths it went to and the extraordinary involvement of the vice president's office.

(BEGIN VIDEOTAPE)

ROBERTS (voice-over): In any administration, it's all about shaping and controlling the message. But the Libby trial has revealed a White House in near panic over accusations its pre-war intelligence was flawed if not outright fraud. According to "Scooter" Libby's testimony, his boss, the vice president was about to boil over and launched an aggressive campaign to discredit Joe Wilson's claims that the White House lied when it said Iraq tried to buy uranium from Niger. One tactic, declassified part of a secret national intelligence estimate. Information that would help the White House and leak it to a select group of reporters Libby knew he could trust.

QUESTION: Did anyone decide to leak the NIE that week?

ANSWER: Well the president had told me to use it, and declassified it for me to use with Judith Miller.

ROBERTS: Dick Cheney comes off as the puppet master in this case. When the White House Press Corps zeroed in on Wilson's accusations, Libby says Cheney gave him very specific language.

LEWIS "SCOOTER LIBBY", GRAND JURY TESTIMONY: UNIDENTIFIED MALE: He gave me instructions as to what I should, what I should say to reporters.

ROBERTS: Libby dictated the vice president's talking points to an aide, Cathie Martin; they were the template for the administration's response. Another tactic -- beat up the press. Lean on a big name like NBC's Tim Russert, and insist the White House's side get fair treatment.

LIBBY: He at least had to say that the White House has denied this, the CIA has denied this, the Vice President's Office has denied this.

ROBERTS: Martin also made up a list of ways officials could fight back. Top of that list, Cheney going on "Meet the Press." another option, broaden the circle of leaks to include "The Washington Post", Walter Pincus and David Sanger of "The New York Times". But damage control quickly turned to circling the wagons.

When the White House defended Karl Rove, but not "Scooter" Libby, Cheney sensed that Libby was being thrown to the wolves and demanded a stronger response. He wrote not going to protect one staffer and sacrifice the guy that was asked to stick his neck in the meat grinder because of the incompetence of others.

(END VIDEOTAPE)

ROBERTS: And to this day the vice president continues to both defend "Scooter" Libby and shape the message around the Iraq war to the exclusion of any sense of reality, according to his critics. But it should also be pointed out that the press doesn't exactly come out of this case unscathed either -- Wolf.

BLITZER: All right. Thank you -- John Roberts reporting for us.

Still ahead tonight here in THE SITUATION ROOM, the House Speaker Nancy Pelosi speaking out about that controversy over her use of U.S. military planes as Republicans step up their attacks on the House floor.

Plus, a CNN exclusive, mysterious and heavily armed fighters showing off their hostages and vowing nothing, nothing will stop them and their mission. We're going to take you to a remote corner of Africa where a living nightmare is unfolding right now.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Carol Costello is monitoring developments coming into THE SITUATION ROOM from around the world. What's crossing the wires now, Carol?

CAROL COSTELLO, CNN ANCHOR: I have it right here, Wolf. The Senate confirming General George Casey as Army Chief of Staff, today's vote 83-14. Casey had been the commander of U.S. forces in Iraq since July of 2004, he was replaced recently by Army General David Petraeus. Today's vote came as Democrats voiced opposition to President Bush's plan to increase the number of U.S. forces in Iraq.

A military judge in California has now granted a Marine corporal's request to withdraw his guilty plea. Last month Corporal Trent Thomas pleaded guilty to charges of kidnapping and murdering an unarmed Iraqi civilian. But Thomas says he no longer thinks he's guilty. He now tells the judge he was following a lawful order.

And troubling news tonight about autism -- the rate of the disorder is much higher than experts previously thought. A study by the Centers for Disease Control and Prevention finds that about one in 150 children has autism. That's an increase of about 50,000. Advocates say the new finding should fuel efforts by the government to spend more money on research and services. That's what I have right now, Wolf.

BLITZER: All right. Carol, thank you.

And still ahead here in THE SITUATION ROOM, millions watched her life unfold on reality TV. Now, many are anxious to learn just out how Anna Nicole Smith died today.

And new developments also coming into THE SITUATION ROOM tonight on the controversy regarding the House Speaker Nancy Pelosi and her need for a military plane. She's speaking out. We'll tell you what she's saying. We'll be right back.

(COMMERCIAL BREAK) BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now, small progress regarding North Korea's nukes, international talks on Pyongyang's nuclear program resume in Beijing. The six-way talks will consider an agreement for North Korea to take some rare eliminate steps towards disarming. We'll see.

In Mecca, Saudi Arabia, Fatah Hamas negotiators have agreed on the outlines of a unity government. It's not clear yet if the new Palestinian government will recognize Israel's right to exist. The U.S. and other governments have cut off funding to the Palestinian Authority because Hamas won legislative elections last year.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

She was an actress, a "Playboy" playmate, once married to an 89- year-old billionaire. And she even took a case to the United States Supreme Court. Now, 39-year-old Anna Nicole Smith is dead. Our chief medical correspondent, Dr. Sanjay Gupta is standing by at the CNN Center. But let's go to the hospital down in Hollywood, Florida where she died earlier today -- John Zarrella covering the story for us -- John.

JOHN ZARRELLA, CNN CORRESPONDENT: Wolf, to recap what happened, this afternoon at about 1:45, Anna Nicole Smith was found in her hotel room not far from here at the Seminole Indian Hard Rock Casino. She had apparently been there since Monday. She was found by a nurse. And a few minutes later, a bodyguard began to administer CPR, the Seminole Indian Reservation -- then their own paramedics arrived on the scene, as well as Hollywood paramedics.

And she was transported here to Memorial hospital. She may well have already been deceased by the time she got here. But she was pronounced dead at 2:49 p.m. here at the hospital, bringing to an end Anna Nicole's Smith often very troubled life.

(BEGIN VIDEOTAPE)

ZARRELLA (voice-over): Anna Nicole Smith's life was a series of crises, most recently, last September when she gave birth to a daughter in the Bahamas. Days later, her 20-year-old son died mysteriously while visiting her in the hospital from what's believed to be an accidental overdose of methadone and anti-depressants.

That was followed by a wedding to her lawyer, Howard K. Stern, who said he is the baby's father. But another man also claims to be the father. And a paternity suit continues. Smith was no stranger to the courts. She was locked in a 12-year battle with the son of her late husband, J. Howard Marshall, over the billion-dollar fortune he left behind. She was 26. He was 89 when they married in 1994.

The case went all the way to the Supreme Court and it's still being waged in federal court to this day. The former "Playboy" playmate of the year also had very public battles with weight and addiction, a problem she talked about with CNN's Larry King.

SMITH: I got addicted to pain pills and also alcohol when and my husband was dying and when he died.

LARRY KING, CNN ANCHOR: Where were you treated?

SMITH: I called and put my own self into Betty Ford and got my own self well.

ZARRELLA: It's the stuff soap operas are made of. But it was Anna Nicole Smith's real life, a life she once said seemed cursed.

KING: Things happened, though?

SMITH: Every single day, something happens to me. It's true.

KING: Really? You think there's sort of like a cloud that hangs over you?

SMITH: Yes. A dark one.

KING: A dark one?

SMITH: Yes.

(END VIDEOTAPE)

ZARRELLA: Wolf, her body has been transported to the Broward medical examiner's office. An autopsy is expected to begin tomorrow, and we should have some preliminary results hopefully sometime tomorrow -- Wolf.

BLITZER: All right, John, thank you for that.

Sanjay Gupta, our chief medical correspondent, is standing by as well. Talk a little bit about what we know. A lot we don't know, Sanjay, about the cause of her death.

SANJAY GUPTA, CNN SR. MEDICAL CORRESPONDENT: There's a lot we don't know as well. 1:38 p.m. is when that nurse activated that 911 call. We don't know how long Anna Nicole Smith had already been down or unconscious at that point. Sounds like what we're hearing, details that have been coming in saying at the time the paramedics actually showed up, she did not have a heart beat, she was not breathing on her own. They had to try and put a breathing tube down her -- into her trachea and try to restart her heart. It sounded like those things were not successful.

You'd think, as physicians, as health care personnel, you try and think about what's the most likely thing that happened here, and I think you have to really think about the heart as being the most likely culprit.

Why she would have heart problems? Not exactly sure. But some sort of heart problem would be something that the medical examiners would really be looking for.

Also lung problems. Could there have been some sort of a clot? It's called a pulmonary embolism, that actually traveled up and went into her lungs. Could it have been some sort of medication problem? Either too much medication or an interaction of medications.

Wolf, we also heard the fact that she may have been having flu- like symptoms the last few days. Sometimes, these types of viruses can not only cause fever, but they can actually infect the lining of the heart. She had a nurse with her. Any of these things could have been part of the problem. We don't know. That's going to be what the medical examiner is really looking for.

BLITZER: She had a weight -- a serious weight problem, in addition to being addicted to painkillers when she checked into the Betty Ford clinic. But at one point -- what, she's about 5'11 -- she went from, what, 140 or 130 pounds up to 230 or 220 pounds, and then she lost it. That obviously can't be good for someone's health.

GUPTA: Yes, you really have to think about that. It was about 70 pounds, I believe, she lost over a period of eight months.

She was taking that diet plan called Trimspa. A lot of people have heard of this. At the time she was taking it -- this is important, I think, Wolf -- ephedra was not banned. A lot of people have heard of ephedra. It's a weight-loss supplement. And there was concern when it did get banned that it could have some effect on the heart rate as well -- increased heart rate, increased blood pressure. Whether that had anything to do with this, we don't know as well.

But you're right. That's something else to think about in terms of her overall health history.

BLITZER: Sanjay Gupta, thank you very much for that.

This note to our viewers: CNN's Larry King has interviewed Anna Nicole Smith on several occasions. Tonight, he'll have extensive coverage of her death. Among his guests, Smith's sister. All that coming up tonight on "LARRY KING LIVE." That begins 9:00 p.m. Eastern right here on CNN.

In other news we're following tonight, there are new developments regarding the House Speaker Nancy Pelosi and just how she'll travel around. Our congressional correspondent Andrea Koppel has been following this story for us and she joins us with the latest -- Andrea.

ANDREA KOPPEL, CNN CORRESPONDENT: Wolf, Speaker Pelosi began the day today accusing the Pentagon of treating her differently from former Speaker Dennis Hastert, and suggested that might be because she's a woman. She later backed off that accusation, and said she's not being discriminated against, but rather, it's all about respect and getting equal treatment. Just one example of a day filled with political drama.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): On the floor of the House, Republicans pounced.

REP. ERIC CANTOR (R-VA), CHIEF DEPUTY WHIP: A request was made by the office of the speaker for a plane that, according to the Air Force, has a game room, a state room, entertainment center, bedroom, shower and seats 42 to 50 people.

KOPPEL: For hours, Republicans accused the speaker of arrogance and hypocrisy.

UNIDENTIFIED MALE: It's about the Democrats abuse of power since they've taken office just a short month ago.

KOPPEL: Pelosi fired back.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I have never asked for any larger plane. I have said I'm happy to ride commercial. And if the plane they had doesn't go coast to coast, I'm happy to ride commercial.

KOPPEL: But Pelosi is insisting she fly nonstop. And in a statement the top House law enforcement officer said, he recommended it, due to the post-9/11 threat environment.

Even the White House seemed to come to her defense.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: It is important for the speaker to have this kind of protection and travel. It was certainly appropriate for Speaker Hastert.

KOPPEL: But in a letter to Pelosi on Wednesday, the Pentagon indicated the offer wasn't open-ended. "While every effort will always be made to provide nonstop shuttle support, such support is subject to aircraft type and availability. And therefore, may not always be guaranteed."

An Air Force spokesman told CNN Pelosi would likely travel on the small Gulfstream jets owned by the military.

(END VIDEOTAPE)

KOPPEL: Now, one of her top lieutenants, Pennsylvania Congressman Jack Murtha has told CNN, since Republicans have raised this subject, he plans to hold hearings this spring. Not just on congressional travel, but on travel on military planes by administration officials as well. Wolf.

BLITZER: And there could be some bombshells on that front as well, Andrea. Thank you.

We'll be watching all of this story unfold.

Still ahead tonight -- new developments in the crash of a U.S. military helicopter. Are Iraq's insurgents simply getting smarter? I'll speak about it with the top U.S. general in Baghdad.

And heavily armed rebels turning one of the world's richest oil regions into a no-go zone. We're going to take you on a dangerous journey as the rebels show off their hostages. You're going to want to see this. It's a CNN exclusive. We'll be right back. (COMMERCIAL BREAK)

BLITZER: We're learning more about that crash of a Marine Corps helicopter yesterday in Iraq, but is it part of a deadly new pattern facing the United States military? And just what is the role that Iran is playing in the stepped-up attacks by insurgents and Shiite militias inside Iraq?

And joining us now from Baghdad, U.S. Major General William Caldwell. He's the chief spokesman for the multinational forces in Iraq. General, thanks very much for coming in.

A lot of us are deeply worried about these six helicopters that have gone down in the past three weeks alone. What is going on? A lot of loss of lives.

MAJ. GEN. WILLIAM CALDWELL, MULTINATIONAL FORCE SPOKESMAN: Wolf, well, first of all, let me express our deepest condolences to all the families and friends who have lost someone in those helicopters. It's a tragic event.

What I would do is try to put this last one in context because I think this set some people off. From our indications right now, Wolf, that last helicopter crash was, in fact, probably malfunction-related. And we're getting that now because we had a wingman, a Cobra gunship that was with that CH-46 helicopter. And the reports that we're getting right now indicate that there had been a helicopter malfunction just prior to the helicopter crash.

BLITZER: Have the insurgents, the terrorists, the enemy in this particular case, improved their capabilities as far as shooting down U.S. helicopters?

CALDWELL: Well, Wolf, they're obviously doing something different and that's why we went ahead after we started analyzing them when they first started, when they had the first effective ground fire against that first helicopter and adjusted our tactics, our techniques and our procedures and started spreading that throughout the theater so that we could minimize what they were starting to do to counter what we were doing.

BLITZER: Are you -- do you have any evidence that Iran is involved in assisting on a day-to-day basis the insurgents or the militias in going after U.S. troops and equipment?

CALDWELL: Wolf, what we do know is that Iran has, in fact, been providing both weapons and equipment and munitions to insurgent elements here within Iraq that are being used against coalition and Iraqi security forces. And we also know that they've been providing training through surrogate elements within Iran for Iranian -- I mean, Iraqi insurgent elements.

BLITZER: And...

CALDWELL: That we're very comfortable in saying. And we know that. BLITZER: You have hard evidence to back that up?

CALDWELL: Yes, Wolf. We can show you, actually, munitions that were manufactured in Iran, manufactured as late as 2006 that we have recovered here within Iraq.

BLITZER: The Iraq -- the Iranian ambassador in Iraq says that the U.S. military's holding as many as 30 or 40 Iranians in custody right now. Is that true?

CALDWELL: No, that's not accurate, Wolf.

BLITZER: How many Iranians are you holding right now? We know you took some in Irbil several weeks ago and the Iraqi government was not very happy about that.

CALDWELL: We did conduct that operation in Irbil. We picked up five Iranian Kuds force (ph) personal at that location. We're working right now through the information that we gleaned from that site along with the debriefings that we've been doing with those individuals. And we had hoped to be able to come out sometime in the next few weeks and discuss some of the aspects of what we found at that location.

BLITZER: But you're not able to do that yet?

CALDWELL: No, but suffice to say, Wolf, by all indications, initial indications, they were not -- they were involved, in fact, in illegal activities up there. And we would hope to be able to share that with the American public and the world.

BLITZER: Is that the extent of it, those five Iranians? Or are there more being held by U.S. military now?

CALDWELL: Currently, yes. Wolf, any other detainees did not occur in any kind of recent operation.

BLITZER: But there may be some that have been held over the past few years? Because that's what the Iranian ambassador was suggesting. Some Iranians have been held for three years, he says.

CALDWELL: Wolf, what I would tell you is that there is not a large number of Iranians that are being held. There's the five from up in Irbil and any owners that we have seized before that time we have not publicly discussed.

BLITZER: General Caldwell, good luck to you. Good luck to all of the men and women over there working on this operation. Appreciate your joining us.

CALDWELL: All right. Thank you, Wolf.

BLITZER: The U.S. military, by the way, confirmed that the seven dead in yesterday's helicopter crash northwest of Baghdad were all U.S. military personnel, five Marines and two sailors. Our deepest condolences to their families.

And that brings the total number of U.S. military deaths in the Iraq ward to 3,114.

Up ahead, how would you fix Michael Chertoff's Department of Homeland Security? Jack Cafferty reading some of your e-mail.

And a dramatic and explosive report from a remote area of Nigeria. Menacing and mysterious armed fighters showing off their hostages to our Jeff Koinange. This is a story you'll see here only on CNN.

(COMMERCIAL BREAK)

BLITZER: We have an exclusive and dramatic report for you tonight that you'll see only here on CNN. Our own Jeff Koinange traveled by boat to a remote corner of Nigeria. And as you can see here, he was met by heavily armed masked gunmen on gunboats. His goal was to meet with the leader of a group called the Movement for the Emancipation of the Niger Delta, or MEND, as it's called. Right now they're holding dozens of hostages literally at gunpoint.

Here is CNN's Africa correspondent Jeff Koinange's exclusive report.

(BEGIN VIDEOTAPE)

JEFF KOINANGE, CNN CORRESPONDENT (voice-over): Like Robin Hood and his men hiding in the dense woods, the MEND fighters have found safety in the unmarked islands hidden among the swamps of the delta. So, of course, there is no way to check on their claim. MEND tells us these are but a handful of 200,000 fighters they have throughout these waterways, an area about twice the size of Maryland.

But they could prove their willingness for audacious crimes.

(on camera) Just to show us how confident these MEND militants are, they brought us here deep in the heart of Niger Delta, to show us their latest hostages, 24 Filipino sailors.

(voice-over) It was a brazen raid at sea, The largest number of hostages kidnapped at once. The armed rebels' speed boat surrounded the workers' ship at sea, and they have now been held captive for nearly a month. MEND insists no harm will come to the hostages. This is about intimidation, a demonstration of MEND's power. It's also about ransom.

As for these dazed and confused sailors, imagine what they must be thinking when they see this menacing dance of madness.

UNIDENTIFIED MALE: We're all OK, but only we want to be free. We want to be released.

UNIDENTIFIED MALE: I have a family. And we need to communicate with them but our communications is closed.

KOINANGE: But how did it ever come to this? Who is coordinating these attacks?

After much discussion, the rebels did agree to take us to their leader, but only under one condition. Because of his superstitions we could only interview him in the water, out in the middle of the swamps. We wondered were we finally going to meet the mysterious Jomo?

(on camera) I'm here to find out about the movement. Who are you? What do you want? What's your struggle?

UNIDENTIFIED MALE: The Movement for the Emancipation of the Niger Delta is a struggle, a movement for the liberation of the Niger Delta, the most devastated and the most threatened region in the world.

KOINANGE: Is your fight against the oil multinationals or against the Nigerian government or against them all?

UNIDENTIFIED MALE: Our fight is against everybody, every institution that don't want the people of the Niger Delta to have their fair share of the Nigerian project. Any person that is either by knowing or unknowingly has connived to deny the people of Niger Delta their fair share of the Nigerian project.

KOINANGE: And how far are you willing to go? How far is MEND willing to go to accomplish your goals?

UNIDENTIFIED MALE: MEND has come to stay and that there is no force in the universe that will stop MEND in achieving these demands.

KOINANGE: What do you want to tell the oil companies right now? To leave Nigeria?

UNIDENTIFIED MALE: We are telling all expatriates to leave Nigeria. Leave Nigeria. We will take lives. We will destroy lives. We will crumble the economy, mercilessly.

KOINANGE (voice-over): And with that the interview suddenly ends. The general's men feel vulnerable here in the open. We're escorted out and into open waters. But as we're about to take off one of the masked men issues yet another threat to the Nigerian government.

UNIDENTIFIED MALE: If they don't listen, well, maybe we don't know how many pieces it will go into, but the federal government will not be in peace except they listen to us.

KOINANGE: As for Jomo, we never did get to meet the man who invited us here. Or perhaps we did and he just wouldn't reveal himself.

But when we got home, we did get another message from the e- mailer calling himself Jomo. In this one, he complained the hostages we saw were not kidnapped by his group MEND and that our report would be misleading.

We have no doubt those kidnappers were MEND militants, and we have no idea why their leader would now distance himself from that. But the delta is full of mystery and magic and bloodshed.

Jeff Koinange, CNN, in the Niger Delta.

(END VIDEOTAPE)

BLITZER: Brilliant reporting from Jeff Koinange. I want to thank him on behalf of all of our viewers.

By the way, the Associated Press reporting oil workers right now meeting with Nigeria's president. They're having another meeting scheduled for next week to try to find some sort of solution to this rising violence in the country's oil region. A lot of oil at stake up there.

Let's find out what's coming up right at the top of the hour. Paula is standing by.

Hi, Paula.

PAULA ZAHN, CNN CORRESPONDENT: Hi, Wolf.

Coming at you just about six minutes from now, the sudden and shocking death of Anna Nicole Smith. We're going to look at how the past few tumultuous months affected her body and her mind.

We're also going to look into how many millions she may have been worth, whether she had a will, who gets the money and who now is fighting for the custody of her baby daughter. And, oh, by the way, where is her baby daughter tonight?

More coverage of this developing story coming up at the top of the hour, Wolf. A lot of unanswered questions right now.

BLITZER: I know. And a lot of people are interested in this story.

Thank you, Paula, for that.

Up ahead, Jack Cafferty wants to know how would you fix Michael Chertoff's Department of Homeland Security?

Jack standing by with the "Cafferty File".

You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Jack Cafferty in New York for the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Alan Chertoff testifying before a House subcommittee today about the Department of Homeland Security. Obviously, there are some things wrong with that operation. So the question we ask is how would you go about fixing the Department of Homeland Security? Joan in Chattanooga, Tennessee: "First, the obvious: fire Chertoff. He's worthless. Second, break up Homeland Security. Put everything back the way it was before 9/11. FEMA needs to be a stand- alone department. Then make sure we have oversight on all of the money that's disappearing from that department."

David in Fairfax, California: "I worked for FEMA for 15 years, ten months before retirement in the spring of 2005. Sometime after its absorption into DHS, it became obvious that FEMA was getting worse with Homeland Security. And the only way to fix this thing is to streamline it. The only way to streamline it is to get rid of all of the old management."

Edward in Phoenix: "Jack, there's only one way to solve the problem. Get rid of the people who would rather convict our Border Patrol officers and sell our ports and airlines to our enemies than protect us."

Mike in Westley Chapel, Florida, counters with this: "Get of it, Jack. You cannot get within a five mile radius of a port close to us without being apprehended by security. Stop saying we have no control of our ports. Our ports are the safest in the world."

Mike in Denver: "I would fix Homeland Security the same way I would fix an Edsel, Betamax, foreign war that doesn't seem to be getting any better or any other dumb idea: I would throw it on the scrap heap and try something else."

And Matt in Charlotte, North Carolina: "It cannot be fixed. The Department of Homeland Security reminds me of that part in the circus when the little red fire truck comes out and one clown after another spills out, and just when you think there could not be room for another clown, another one pops out."

If you didn't see your e-mail here, you can go to CNN.com/CaffertFile and read more of these online -- Wolf.

BLITZER: One quick correction: Michael Chertoff. Alan Chertoff, our business correspondent, as opposed to Michael Chertoff, the Secretary of the Department of Homeland Security. I've been confused by those tow names, Jack, for a long time.

CAFFERTY: They look a lot alike, though, you know?

BLITZER: They are very different guys, though, if you know them both, very, very different.

CAFFERTY: My apologies to both of them.

BLITZER: Jack, thanks very much. See you tomorrow. Appreciate it very much.

Let's take a quick look at some of the "Hot Shots", coming in from our friends at the Associated Press.

In Israel, a soldier fires rubber bullets at Palestinian stone- throwers during a protest against the construction outside of a mosque in Jerusalem's Old City.

In Germany a truck lies overturned after sliding on slippery road during snowfall.

In Buenos Aires, Argentina three Bengali white tiger cubs relax in their cage. They are only 240 white tigers left in this world.

And finally, in China winter swimming enthusiasts rub their bodies with snow as they prepare to go for a swim.

That's it for us. Let's go to Paul in New York -- Paula.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com